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If you’re one of the many people with a monthly auto payment, you may assume that the terms of your loan are set in stone and impossible to amend once the paperwork is signed—fortunately, that’s not the case. “Most people don’t think about refinancing a vehicle, but it’s a great way to save money or even to give your budget a little wiggle room,” says David Brand, Director of Loan Origination at Hudson Valley Federal Credit Union. “It’s also relatively easy and can be done much faster than other types of loans.” Here are three key reasons to consider refinancing your auto loan.   

You could be missing out on a better rate.

When you refinance your loan, you may be in the unique position of being able to receive a lower rate than you were originally offered, potentially saving you thousands over the life of your loan. It’s important to do your homework and determine how to access these lower rates. While most people automatically look to a bank for their loan needs, a credit union may be the more affordable option.

Credit unions like HVFCU typically offer lower rates on loans and credit cards. According to the National Credit Union Administration, the average interest rate on a 48-month new-car loan was 2.58 percent at a credit union, compared with 4.62 percent at major banks—which can save you almost $400 a year on a typical auto loan of $35,000. Most people can easily qualify to join a credit union based on where they live or work, and many credit unions require as little as a $5 savings deposit to start taking advantage of their services.

Your credit may have improved since you purchased your vehicle.

The rate you were offered when you originally applied for an auto loan was based upon your credit rating at that time. If you didn’t have a strong borrowing history when you applied for your loan, you most likely received a higher rate than someone with a proven track record of repayment.

Since then, your credit may have dramatically improved. If you have paid off outstanding debt and maintained on-time and current payments on your loan and other financial obligations, your credit score will positively reflect that—and you may qualify for a lower rate. When you refinance, you can take advantage of any positive changes to your credit score—and save money every month.

Refinancing can make your debt more manageable.

Is your monthly budget stretched to the limit? Refinancing your auto loan may be the solution you’ve been looking for. Refinancing your loan for a longer term often results in a lower monthly payment. While ultimately, you may pay more over the life of your loan, your ability to afford the lower monthly payment—and therefore protect your credit score—may more than outweigh this negative. 

In the end, refinancing your auto loan can help you save money or relieve you of a financial burden. It’s important to do your homework before making this important financial decision. Take the time to check your credit score and determine if it reflects a positive enough change to deem you eligible for a lower rate. Research auto loan rates from a variety of sources—keeping in mind that credit unions typically offer lower rates than banks—to ensure you are getting the most out of your money.


Hudson Valley Federal Credit Union

(845) 463-3011



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Hudson Valley Magazine editorial staff.